This Green Paper launches a consultation of stakeholders in order to identify solutions which could improve contract law in the European Union (EU). Different national rules effectively hinder the smooth functioning of the European internal market. The proposed options should help to resolve the existing problems.

ACT

Green Paper from the Commission of 1 July 2010 on policy options for progress towards a European Contract Law for consumers and businesses [COM(2010) 348 final – Not published in the Official Journal].

SUMMARY

In this Green Paper, the Commission sets out solutions aimed at improving the coherence of European Contract Law. Some of the options presented concern rules which are mandatory, others concern solutions which are more flexible and may be implemented voluntarily by Member States. Following an assessment of the results of the consultation being launched by this Green Paper, the Commission is to propose new European legislation before the end of 2011.

New European legislation could facilitate and increase business activity and consumer confidence when concluding contracts of sale in another European country. A new European legal instrument also provides a way to increase legal certainty and to reduce the high transaction costs involved in this type of trade. Small and medium-sized enterprises (SMEs) are particularly affected by these issues.

A new legal instrument would enable European businesses to make savings, increase their product offer and provide better value for money to the benefit of European consumers.

A new European instrument

The Commission makes a set of proposals on the legal nature of the instrument. It could take the form of:

a publication by an Expert Group, whose recommendations could be used in the development of laws and model contracts;

a toolbox for legislators, in the form of a Commission act or an interinstitutional agreement (between the Commission, Council and Parliament), to be used as a reference on matters of contract law;

a Commission Recommendation, for European Union (EU) countries to gradually and voluntarily adopt a European instrument. This solution would give them the option to either amend their national law or to create an optional regime;

a Directive on harmonising national laws, drawn up on the basis of minimum common standards. States could therefore retain more protective rules than those in the Directive;

a Regulation setting up an optional instrument, specifically an alternative legal regime could be adopted by every country, providing contracting parties with the option to freely choose between the two regimes;

a Regulation establishing European Contract Law, replacing national legislations;

a Regulation establishing a European Civil Code, which would replace not only national contract laws, but also the rules applicable to other related fields (such as tort law and benevolent intervention).

These new standards could relate to:

contracts between businesses and consumers. In this area, the applicable law is to be partially harmonised (“minimum harmonisation”), specifically to ensure consumer protection. In the event of dispute between parties from two different countries, businesses shall apply the law of the country of residence of the consumer, or at least the mandatory provisions;

business-to-business contracts. In this area, the parties are free to choose the law applicable to the contract.

In addition, the scope of the new instrument could cover all domestic and cross-border contracts or cross-border contracts only.

Finally, the content of the instrument could provide:

certain rules for general contract law, particularly those relating to the formation and performance of contracts, to the right of withdrawal, to change of parties, etc.;

general rules and rules specific to certain types of contracts, for example concerning the most prevalent types of contracts (sale of goods and certain provision of services).